How To Find A Financial Advisor If You’re Not Rich

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How To Find A Financial Advisor If You’re Not Rich

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You don't have to be Scrooge McDuck with a giant bathtub full of gold to feel worthy of a financial advisor's attention. While many advisors only work with the affluent, plenty cater to those with less wealth under their belts.

To find them, you need to know the type of advice you want, what the advice typically costs and how to find affordable financial advisors -- either in your area or online.

Financial advisors come in all shapes and specialties. That's why choosing a financial advisor that aligns with your needs is important.

For instance, say you want expert financial planning but want to implement the plan yourself. Working with a holistic financial planner who would manage your investments may not be the right fit. You'll be better off with a financial planner who offers plans for a fixed fee.

On the other hand, you may want full-service investment management and estate planning in addition to your financial plan. In that case, the holistic planner might be the ideal fit.

A full service financial planner will cost more up front, but the amount of help you get for your costs will be more substantial.

If you feel well educated and confident in what you need and are simply looking for a second opinion, you may be able to find high quality advice at an a la carte price. Whatever your needs, there's an advisor out there who can deliver.

Financial advisors have two fee structures: fee-only and fee-based.

Fee-only financial advisors don't earn commissions on trades and other transactions. They only make money from client fees, which can be flat-rate services, hourly charges or assets under management (AUM) fees, where you pay a percentage of your account balance annually.

Since they don't earn commissions, they're less likely to have a conflict of interest with the products they recommend. And since you can access many fee-only advisors as needed, it's easier to strike a balance between the advice you need and your available budget.

Fee-based financial advisors make money from a wide range of fees, which can include AUM fees, commissions and performance-based fees. And with those fees come potential conflicts of interest, since advisors may be encouraged to recommend products where they receive a higher payout.

While there's no one type of advisor fee structure that's better than the other, always ask about fees when you meet with an advisor. You should clearly understand every financial advisor's fees, whether for a one-off financial plan or ongoing account management.

If you're starting or still building your wealth, it can be more difficult to find financial advisors with a minimum account size that aligns with your assets. And there's a reasonable explanation for this: business and client experience.

Marc Jimenez, a certified financial planner (CFP) with CAM Investor Solutions, says account minimums can help advisors maintain an exceptional client experience.

For instance, if an advisor has a higher account minimum, that often translates to fewer clients but delivering each a higher level of service. Advisors with lower minimums may have to have more clients to earn a living, and it's possible for service to suffer.

While low account minimums don't imply a lower level of service, it's difficult to begrudge advisors who want to earn more from fewer clients. Say you're an advisor charging an average 1% AUM fee. Here's how much you'd earn with different account minimums:

Working with fewer clients that bring in more revenue can reduce overhead and allow advisors to develop real relationships with their clients, which is why many have higher account minimums, but the good news is not all advisors do.

"Remember, not everyone wakes up one day with a million dollars in the bank," says Jimenez. Even the wealthiest investors had to start somewhere -- with planning, saving and investing. And while the search for an advisor with a low account minimum might take a bit longer, they're out there and ready to help people just like you grow their financial confidence.

With your financial goals and budget in mind, leverage these no-cost resources to find affordable financial advisors near you.

Jeff Busch, a certified financial fiduciary with Lift Financial, says that a great place to start any search for an affordable financial advisor is with friends and family. Some advisors will waive account minimums for referrals from current clients.

Even if they don't waive any fees, the advisor might refer you to another advisor on their team who's either building their practice or has a lower account minimum. Still conduct your due diligence on anyone your family refers you to.

Since financial advisor professional organizations are all about supporting their members, they generally have advisor search tools to help locate pros in your area.

And here's a bonus: All of the advisors listed with the below organizations are fee-only advisors and may be able to offer hourly or fixed-fee services to keep costs manageable.

Fee-Only Network

The Fee-Only Network isn't an advisor-matching service and doesn't engage in pay-to-play. Instead, advisors listed on their site pay a flat fee and must also be members of specific professional organizations, including NAPFA, XY Planning Network, Garrett Planning Network and Alliance of Comprehensive Planners.

You can use their handy search bar to find a selection of local advisors and review everything from their credentials, professional certifications and areas of expertise to their contact information.

Garrett Planning Network

Advisors in the Garrett Planning Network are all fee-only financial planners and never have account minimums. Advisors also offer hourly and fixed-fee services so you can access advice on-demand -- the same way you'd access your doctor or dentist.

Their "find an advisor" tool lets you search by a wide range of criteria like financial priorities and fee structure. You can then review individual advisor profiles and learn about their practice and certifications.

Let's Make a Plan from the CFP Board

The CFP certification is essentially the gold standard of financial advisor credentials. To find one, you can visit the Let's Make a Plan website and use their advisor search tool to find a CFP near you.

You can also search by advisor specialty if you have unique needs, like elder care, divorce planning or debt management.

National Association of Personal Financial Advisors (NAPFA)

Advisors in the NAPFA network have all met fee-only standards, and must submit a comprehensive financial plan for peer review to qualify for acceptance.

If you're looking for comprehensive advisors rather than those with a niche specialty, this could be the professional organization for you. All advisors must specialize in providing holistic advice across the whole of your financial life.

XY Planning Network

Advisors in this network of more than 1,600 advisors are all CFPs, with most focusing on clients in the Gen X/Gen Y age range. While this network is considerably smaller than the others listed above, you may like the organization's generational focus and fee transparency.

Each advisor's profile specifically states how they charge and their rates so you can easily "know before you go."

If you're a fan of index investing and low costs, a robo-advisor could be the next best thing to a financial advisor. Most robo-advisors offer pre-built portfolios for an annual AUM fee considerably less than you'd pay a human advisor.

Even with a robo advisor, you don't necessarily have to give up a human touch for low costs. Robo advisors like SoFi Automated Investing give you free access to a CFP (wow), while others like Betterment and Vanguard Personal Advisor require account minimums for consults with a live financial pro.

Here's the straight shot: finding free financial advising is tough. Advisors go through rigorous training and have business overhead. They deserve to be paid for their deep expertise just the same as your family physician. However, options for free financial advice exist.

For instance, your bank or credit union may have professionals on staff who will happily consult with you on your financial questions. And if you're a member of a financially-challenged community, the Financial Planning Association (FPA) offers pro bono financial advice for those in need. You may need to belong to a certain demographic or meet income requirements to qualify.

Be wary of financial advisors who offer their services for free without an obvious reason. They may be using you as a cash cow for referrals to expensive products like indexed universal life insurance that may not be the best choice for your situation.

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